As continental European banks struggle with the credit crunch alongside the U.K. and the U.S., their appetite for funding leveraged buyouts has dried up just as fast.
According to data from Nottingham University's Centre for Management Buyout Research, the buyout market in continental Western Europe and Ireland has fallen to its lowest level since 2004, reaching €22.7 billion ($33.37 billion) in the first six months of 2008, down 64.2% from €63.4 billion in the same period last year, while the number of buyout deals has fallen 19% from 401 to 325 in the same period. What's more, average deal size is just €70 million, well down on the €133 million average in January-December 2007.
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According to Christiian Marriott, a director of Barclays Private Equity, which co-sponsors CMBOR together with Deloitte, the figures confirm that what activity there is tends to be in the midmarket, with 41% of deals from family firms.
"With debt still difficult to find on larger deals and many potential buyers and sellers unwilling to blink until economic conditions improve, there's a sense of stalemate across the European market," he said, in a statement.
The number of exits, meanwhile, is down from 154 in the first half of 2007 to 89 this year.
By comparison, the U.K. had 312 buyout deals worth a combined €15.6 billion ($22.9 billion) from January through June, compared with 669 deals worth €67.3 billion in the whole of 2007 - and the average deal size halved to €50.1 million. - Jonathan Braude
